It’s no secret that the pandemic has strongly bent the stability of our global economy. In fact, a lot of businesses, especially the smaller ones, have packed up and closed. But before you follow suit, ask yourself if you have considered all your options and have reduced controllable expenses (or cut operating cost significantly), then decide from there.
When a company hits a stumbling block (or a stumbling mountain when it’s as tremendous as the global crisis today), it’s a little comforting to know that you don’t have to throw away all the years of hard work. Cost cutting is one of the ways you can keep your head afloat in times of crisis. It can be a band-aid solution, while it can also be the most painful decision an employer has to make.
But before we dive in on how to cut costs in a company, we need to get the idea of what an operational cost is and its relevance.
The operational cost is the expenses in terms of running a business or a company on a day-to-day basis. Examples of this include payroll, company utilities, office rent, taxes, and what-not. Think of this as the sum of money that keeps a company running–in other words, one of the most relevant elements in business.
There are times when a company initiates cutting operational cost to keep its ground in the market when it is not bringing in as much money as expected for a time being. And here we’ve rounded up the most practical and effective ways do that:
The typical go-to of every company today, digital advertising through the power of social media is the easiest way to cut cost on traditional advertising because it’s free, unless you want to boost post impression and pay a little extra.
According to a study done in the United Kingdom, more than half of all adults find it hard trusting a brand until they see “real-world proof” of the brand being true to its claims and promises. And with the advent of social media, your loyal consumers get the opportunity to speak on your behalf through testimonials, boosting your trustworthiness among nonconsumers and encouraging them to switch to your brand in return.
Social media is also a great tool to humanize your brand—to reflect your brand personality and brand values and to be more than just a provider of a certain product or service. This way, consumers actually listen to what you have to say as a brand, and from there, you can take the opportunity to introduce or reintroduce your brand and how your goods and services can benefit them. As a result, your brand awareness goes up without taking a toll on your bank account.
However, since social media has been very widely used, you want to be able to digitally compete with your competitors as well. Most companies have had to hire an entirely separate team solely for digital marketing, and while that move may be costly, outsource digital marketing teams like RipeConcepts Inc. are able to assist you in the digital world without letting you break the bank while delivering premium quality output and performance.
Work from Home
An efficient way to reduce expenses in office is to implement work-from-home setups for your employees. While that has been the trend today, some companies have already gone two steps ahead a few years ago and embraced the flexible working schedule for employees; some of these set on a case-to-case basis.
There are companies that allow four days in office with one day WFH, and there are companies that only allow work-from-home setup for employees who can still do the job without leaving their houses. One of the latter companies is Airbnb, which allows employees in the position of employment brand manager and product manager, to name a few, to work in the comfort of their homes. However, other companies find that terrifying, but as proof that it works, after all these years since Airbnb has implemented this, it has always maintained its A-plus position in the market.
If you’re one of the companies new to this setup or quietly terrified about it, we have published tips on how your employees can be productive working at home so they can provide the same quality service they do while in the office. These are tips to also help your employees settle in with the shift.
Ride in the times and use technology to your advantage. One of the internet’s greatest contributions is, it made communication easier, faster, and cheaper. Computer and phone applications like Skype, Facebook Messenger, and Viber offer instant messaging services via chat or call that make collaborations in a breeze. Zoom is also popular today for online meetings and seminars.
There is not much of a rising need to hire a full-time messenger to run around the city bringing files from desks to desks anymore because the internet can do it for you. Web applications like Gmail, Google Docs, and Dropbox allow you to send and receive media files and documents in a matter of seconds with no cost at all.
Going high-tech might initially be expensive—buying a laptop, getting a smartphone, setting up an internet connection, etc.—but in reality, this shift to modernization actually helps save you more money and time in the long run. After all, like every good businessman swears by, “Time is money.”
Additionally, you save up on silent budget eaters, like paper and ink supplies, while making document filing and searching relatively easy as compared to doing it manually. Remember that silent budget eaters may not seem as relevant as employee salary or utility bills, but these minute expenses can also lead up to a huge chunk from your budget pie if not monitored closely.
We are in no way suggesting that you overwork your employees, but in the context of cost cutting, a hefty salary appraisal for added tasks is far more cost-efficient than hiring someone else for a specific job—as the process of hiring is already expensive on top of paying for another employee.
Encouraging your employees to multitask also helps them reach their full potential under your care, making them more loyal to the company and keeping thoughts of leaving slim. Invest in trainings, seminars, and conferences local and abroad to make the best of employees and get the best out of them.
A pool of employees who are growing in skill set and knowledge in the field also elevates the general performance of a company, helping you climb the ladder of corporate success in business while keeping operating costs at a reasonable level.
However, when considering this option, study the tasks you wish to pile on per employee. If all the tasks are too heavy for one employee, it may lead to poor performance as the employee cannot focus on one task at a time, and it may also lead to stress and burnout that could end in a high turnover rate, which is in fact more costly for the company.
The solution that blankets most of these items is to outsource. This strategy has proven to be so effective that more and more companies are adapting it. Outsourcing means you’re paying for the same work for lower rates because you employ offshore. The Philippines and India are highly popular for this type of work.
While some companies are looking toward hiring seasonal employees, outsourcing remains more efficient because you have the option to settle the deal through pay by output. You also cut cost on office utility, which adds up to a significant percentage of your operational budget, because outsource employees usually work in a different place or country.
It is undeniable that there will always be risks associated with outsourcing, but the best thing to do is to find the right partner, the right company, the right organization to do the jobs with the same level of excellence you expect from your in-house employees.
RipeConcepts Inc. has offered unparalleled service to all its clients for eleven strong years, and each year has only been better than the last. With big clients such as Disney and Mattel, we assure you our employees are the creams of the crop, providing you with outputs that justify your decision of collaborating with us.
The current events that affect us globally have already managed to create a significant impact in the economic landscape, and it still is affecting business after business. And while these tips are surely effective, take them with a grain of salt and feel free to modify them based on your needs. One of the keys in overcoming stumbling blocks like the global crisis today is to strategize according to what applies to your company and situation. You may only need just one of these, or you might need them all—you’re the only one who can tell.
On behalf of RipeConcepts, we wish you all the best.